FAQ – Social Security

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It’s not the Social Security I worry about, it’s the Medicare. Don’t I have to pay out of pocket for it once I retire? It’s expensive!

Medicare has four parts:

  • Part A covers inpatient hospital costs;
  • Part B covers outpatient medical and physician costs;
  • Part C is a Medicare Advantage Plan that includes Parts A and B, and often, Part D; and
  • Part D covers prescription drug costs.

In 2012, Part A premiums (for those who pay them) are $451/month. Monthly premiums for Part B are $99.90 (higher income consumers may pay more).* Overall, Medicare covers about 64% of health care expenses for those 65 and older.**

Most people do not pay a monthly premium for Medicare Part A because they or a spouse paid Medicare taxes while they were working. If neither you nor your spouse paid into Medicare, you may be eligible for CalSTRS to pay your Medicare Part A premiums. You must be at least 65 and not eligible to receive Medicare Part A premium-free. You can call CalSTRS Member Services at 1-800-228-5453 or visit www.calstrs.com and click on Contact Us to learn more about whether you’re eligible for CalSTRS to pay your Part A premiums.

Everyone who has Part B coverage must pay the Medicare Part B premium. Medicare Advantage Plans (Part C) are available through private companies approved by Medicare. They provide all of your Part A and Part B coverage, and usually include Part D, too. Premiums and out-of-pocket costs vary from plan to plan.

Medicare drug plans (Part D) are offered by a variety of insurance companies and other private companies. The cost to you depends on which plan you choose.

Note that the Employee Benefit Research Institute estimates that a married couple with median drug expenses may need $271,000 to cover health care expenses in retirement.** Taking advantage of your district’s 403(b) or 457 plan may help you better manage health care costs in retirement.

* Source: www.medicare.gov.

** Source: Employee Benefit Research Institute, Issue Brief No. 351, December 2010, “Funding Savings Needed for Health Expenses for Persons Eligible for Medicare,” www.ebri.org.

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